Vol. XVII No.5
May 2012


The Theft of Titan


In the early 1920’s, Max Ausnit, who became one of Romania’s principal industrialists, took over a wire and nail manufacturing factory in Galati founded by his father, and built it into a steel mill complex called Uzinele Metalurgice Titan Nadrag Calan (“TNC”). It included a new steel mill at Ferdinand, now known as the Oţelu Roşu which, along with numerous subsidiaries such as Magazinele Unite, and Socomet, employed about 10,000 people. He had substantial holdings in the steel industry well beyond TNC, but all of his properties were commandeered by Romania’s pro-Nazis regime simply because he was Jewish, and then again by the communist regime that followed. Max Ausnit was hunted as a Jew and a capitalist by a series of Romanian governments and fled Romania in danger of losing his life twice – only to now have his son and heirs subjected to the same bigotry and injustice, this time through the indolence, hostility, and prejudice of more recent Romanian governments. While the families of virtually every major Romanian industrialist have received acceptable compensation for the wholesale theft of their properties, the heirs of Romania’s only major Jewish industrialist have received only a small part of what was stolen from them, and their major claim has been deferred and hindered by the apparent misfeasance of Romanian bureaucrats intent on depriving this family of what has long ago been adjudicated as rightfully belonging to them.

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Romania Hides Evidence in the TNC Case
The restitution process for the shares owned by the Ausnit Family in TNC began in 2001 when, in compliance with the provisions of Law no. 10/2001, Steven Ausnit and his brother Robert – both U.S. citizens -- filed their restitution claim with the Romanian authorities. The Ausnit family then provided the requisite documentation that was at the time available to them to prove their claim to the Authority for State Assets Recovery (“AVAS”), which is the agency that by law renders decisions on restitution claims. Of course, forced to flee Romania, Max Ausnit had little opportunity to collect documents to prove his vast ownership interests, so his family did not possess all of the proofs that might be required by the Romanian state. Despite the fact that Max Ausnit’s ownership of TNC was an open, well-known and significant historical fact and all of the documentation to prove it had been in the complete control of the Romanian government since TNC’s confiscation, Romania nevertheless demanded that the Ausnit family produce the proofs that were in the State’s possession. On several occasions, at several of their offices, requests were made to the Romanian National Archives to deliver documents relating to TNC and on each occasion, the family was told that the requested documents did not exist.

In 2007, six years after the process began and two years after submission of all of the requisite documents, AVAS rejected the restitution claim for TNC specifically grounded on the fact that there were not enough documents submitted in the file for AVAS to be able to establish the value of the net assets and, consequently, the amount of the restitution to which the family would be entitled. The Ausnit family contested AVAS’ decision in court. The Bucharest Tribunal agreed with the family, cancelled AVAS’ decision and ordered AVAS to render a new decision. Both the Ausnit family and AVAS appealed the decision of the Bucharest Tribunal for differing reasons. During the ensuing trial, the Bucharest Tribunal issued a subpoena to compel the National Archives to produce all TNC-related documents in their files, apparently assuming that in a matter as significant as TNC, some documentation had to exist. On the return date, the court was formally advised by the Romanian State that the National Archives had absolutely no records regarding TNC.

Still not satisfied with this response, another effort was made through different sources to test the veracity of the National Archives claim. This effort put the lie to the assertions of the Romanian State and resulted in the production of 18 separate large dossiers concerning Max Ausnit – not one easily mislaid folder, but 18 volumes of records – leaving one to ponder the motivations and the veracity of the National Archives when they advised the family that there was nothing in their files concerning Max Ausnit. The new documents proved the number of shares held by Max Ausnit, the value of the shares and the value of TNC’s assets – which would thereby undeniably enable the family to obtain the restitution which it was so obviously entitled too. Nine years after filing the TNC claim, the Bucharest Court of Appeals rejected the appeal filed by AVAS and affirmed the order to AVAS to render a new favorable restitution decision based on the findings of the Court.

Nevertheless, in early 2011, AVAS filed a second appeal with the High Court of Cassation and Justice –Romania’s highest court -- to overturn the Bucharest Court of Appeals decision. The High Court set the hearing date for November 4, 2011. However, in February 2011, after having lodged the second appeal, but also after another analysis of the documents submitted both in the court file and in the administrative file, AVAS rendered a new restitution decision (Decision no. 29) by which it calculated and proposed compensation for 29% of the net interest in TNC.

Simultaneously with the issuance of Decision no. 29/2011, AVAS irrevocably waived the second appeal in the TNC case and submitted to the High Court of Cassation and Justice a waiver of the trial in the second appeal. The Ausnit family concurred and, since the matter was now irrevocably ended and neither party could alter the result, AVAS properly transferred the entire file to the National Authority for Property Restitution (“ANRP”) for the issuance of the compensation title that could then be used by the family to obtain shares in Fondul Proprietatea as restitution. That was in February 2011. It was only after many futile attempts to contact ANRP and, inconveniently, after the Courts had recessed for the summer, that in July 2011 a letter informing the Ausnit family arrived from ANRP informing them that ANRP had delayed the issuance of the long overdue compensation title until the High Court of Cassation and Justice rendered a final decision and closed the case – despite the fact that this was a purely ministerial act that had no actual consequence since what had already transpired was irrevocable and unalterable.

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Institutional Dysfunctions Plague the Process
Although the Ausnit restitution claim was duly filed with AVAS in 2001, it took them six years to arrive at a determination in the TNC case. That it took two years alone to examine the file for just its contents is an unconscionable and unjustifiable delay under any circumstances -- but when AVAS finally acted, it rejected the claim solely because there were not enough documents in the file to establish the value of the net assets and, consequently, the amount of the restitution. It took Romania all that time just to advise the Ausnit family that, in its opinion, the file was insufficiently documented! And who controlled those missing documents? The Romanian State had them in its exclusive possession, all the while denying their existence.

It is beyond peradventure that people who had their properties confiscated by the Romanian state and were thrown out of the country had no opportunity to obtain, take with them and hold for all these years even a fraction of the documents required to be lodged in a restitution file in order to make such a claim successful. Indeed, Romanian law often prevented the victims from leaving the country with such documentation. The documentation remained in Romania and was lodged at the National Archives -- the institution which Romania had created to house such information. Unfortunately, the Romanian National Archives has consistently proven itself ill-equipped and less than willing to fulfill its vital role in the restitution process.

But even after overcoming ten years of a less than transparent process administered by obtuse, deceitful and biased bureaucrats, through disingenuous travails at the National Archives, meetings and negotiations at AVAS and two full court trials, the Ausnit family simply could not overcome ANRP’s unique brew of sham, treachery, perfidy, stupidity and bureaucracy. Although ANRP is not permitted to change the amount of compensation, and its sole function is to verify whether the claim is fully documented and then issue the restitution title providing the same amount of compensation set forth in the AVAS decision (unless, of course, ANRP can prove that the evaluation was made in breach of the law), from the moment in February 2011 when it received the TNC file from AVAS until the date of this article, ANRP has done everything possible to delay the issuance of the TNC restitution title to the Ausnit family. Only a fool could miss their true intentions.

The Romanian government was rapidly running out of shares in Fondul Proprietatea (the closed-end mutual fund created to provide restitution to claimants where in-kind restitution was no longer available), while the TNC case moved glacially along its gloomy path. By July 2011, Romania had less than a 12% interest remaining in Fondul Proprietatea out of which to provide restitution to thousands of victims. Moreover, Romania was doing nothing – and, to this day, has still done nothing -- to add assets to the fund to obtain more shares or devise a fair plan to compensate those claimants who had legitimate claims that they had actively pursued for so many years. Time was of the essence. But from February 2011 until July 2011, ANRP ignored the Ausnit family. Requests for meetings with ANRP were met by stone cold silence. When ANRP’s letter finally arrived in July, it demanded documentation from the Ausnit family demonstrating that the litigation with AVAS had been resolved through a final and irrevocable decision – despite obviously having AVAS’ request in its hands to issue the restitution title for the very reason that the matter had been irrevocably and finally resolved. Nevertheless, the family dutifully submitted to ANRP all the requested documents including the waiver of the trial of the second appeal submitted by AVAS. They explained to ANRP what it should have known on its own -- that the court’s sole remaining function and the only thing it can actually do by law is to acknowledge the waiver of AVAS. Indeed, the court case no longer had any point to it or any attainable objective since AVAS fully complied with the provisions of the appellate court decision by issuing Decision no. 29. Although this must have been obvious to ANRP, it stubbornly refused to issue the compensation title in the TNC file. It willfully and wrongfully ignored the irrevocable waiver submitted by AVAS and the fact that neither AVAS nor the Ausnit family nor the Court could, under Romanian law, change the award in any manner whatsoever.

Providentially, during the May 26, 2011 meeting of ANRP’s Central Commission for Establishing Compensations, unbeknownst to the family, it voted to approve the issuance of the decision in the TNC file. But still nothing happened. Four months of attempts to meet with ANRP officials finally led to a meeting in early September at ANRP where Mr. Ausnit’s counsel was advised by the then President of ANRP, and her counsel, that the ANRP Board had already approved the restitution and that there was no further action required by ANRP for the issuance of the compensation title in the TNC file other than filing with ANRP of the final decision of the High Court of Cassation and Justice. ANRP’s President further assured Mr. Ausnit’s counsel that immediately upon receipt of the High Court’s decision and without any further delay, ANRP would issue the restitution title for TNC.

Although in total disagreement with the ANRP President’s position, the Ausnit family had no other recourse but to wait until the November 4, 2011 hearing on the docket of the High Court. The final and irrevocable decision of the High Court was routinely issued on November 7, 2011, and it was immediately filed the same day with ANRP.

But the saga did not end here. In the interim, the president of ANRP had been replaced and the new president chose to stone-wall all efforts at inquiry. Eventually, two counselors at ANRP with responsibility for the TNC file, but who both refused to disclose their identities, told the family’s counsel that, despite the fact that the TNC decision had already been approved by the Board of ANRP, since the document was transcribed with the signature of the former president, the entire file had to be resubmitted to the Board once again. Even a casual reader knows that this is beyond absurd – it is illegal, immoral and without legitimacy.

ANRP is an institution and not the personal fiefdom of its current administrators. A decision legally approved by an appointed commission cannot be undone simply because the President of the institution has changed. Moreover, in this particular matter, a final decision rendered by Romania’s highest court required Romania to deliver the restitution title to the Ausnit family. It was ANRP and its new President who determined to tinker and trifle with justice.

ANRP’s new President insisted that the entire file must once more be submitted to the analysis of the Central Commission of ANRP. Indeed, ANRP suggested that its new president was not legally able to sign the decision of the Central Commission for Establishing Compensations until the Prime-Minister issued his decision replacing the former president with the new president of ANRP. When the decision of the Prime-Minister in this respect was finally published in the Official Journal of Romania on December 9, 2011, the Ausnit family was told that the issuance of the TNC restitution title was on the agenda of the next meeting of the Central Commission for Establishing Compensation which was scheduled for December 14, 2011.

Guess what? From that date to the present, every meeting of the Central Commission of ANRP has lacked a quorum and was adjourned without any business being transacted. The issuance of the TNC compensation title that had actually been approved by the Central Commission of ANRP a year ago has been postponed, sine diae, without any legal and certainly no moral justification.

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Another Proposed Taking
And then came Mr. Ungureanu’s government. Although it only lasted three months, it managed to propose a draft law that would have confiscated 85% of the property rights of thousands of victims of Romanian communism including the Ausnit family – inviolable rights that were granted to them twelve years ago by law – by taking without compensation 85% of the value of all pending claims by owners of properties that were seized by Romania's Communist government between 1945 and 1989. Although in total disregard of Romania’s constitutional provisions prohibiting such acts and in violation of Protocol One of the European Convention of Human Rights to which Romania is a signatory and which recognizes property rights as human rights, the Ungureanu regime blithely suggested that principles of justice and decency must give way to those of misguided economic expediency. Prime Minister Mihai Razvan Ungureanu actually acknowledged the "injustice" created by the draft law but blamed previous governments for not solving the issue earlier. To his great credit, the new Prime Minister, Victor Ponta, derided Mr. Ungureanu’s draft law before Parliament for the abomination that is it, but while it may well be dead, those who thought that they could perpetrate such an act are still very much alive. It must be made clear to them that they can neither take back restituted property nor the right to receive such property.

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On March 13, 2012, the Ungureanu government officially suspended the issuance of restitution titles alleging serious irregularities in the compensation process and suggesting that approximately 3 billion Euros (cash and shares) expended by the state did not reach the persons entitled to it. The government’s spokesman was quoted in the media as saying that “there are extremely numerous suspicions in relation to what has happened at ANRP during the past years”. So after eleven years of efforts, armed with the legal and moral right to obtain the restitution title for TNC based on a final decision of Romania’s High Court, and the decisions of AVAS and of ANRP’s Central Commission, the Ausnit family has received nothing. In effect, the family has been penalized by the Romanian State for ANRP’s perverse conduct and questionable practices even though those very practices are to blame for the failure of ANRP to produce the restitution title for TNC.

Romania’s institutional dysfunction cannot be grounds to deprive the Ausnit family of the restitution rights that they were already awarded. Among other things, the theory of “already acquired rights” applies to the TNC matter, meaning that the state must respect the right which has already been recognized and quantified and which has already become the claimant’s property. To do otherwise would contravene the principle of acquired rights, as well as the principles of non-discrimination and non-retroactivity of law. Indeed, ANRP’s dysfunction has been cited by the European Court of Human Rights as one of the main grounds for the issuance of the pilot judgment against Romania. The Romanian government cannot avoid its responsibility to claimants such as the Ausnits by using the very basis for the nation’s censure to avoid payment and it cannot evade its own courts and agency rulings for any reason.

But still, the Ausnit family has been blocked at every turn by specious legal contentions and venal motives calculated to prevent the heirs of Romania’s great Jewish industrialist and philanthropist from ever receiving a single leu. Whether done out of greed, indolence, sheer prejudice, or a combination of all, the result of Romania’s conduct for the family is tantamount to yet another confiscation of the property of Max Ausnit.

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Editors Note: It is our policy not to mention our clients by name in The Romanian Digest™ or discuss their business unless it is a matter of public record and our clients approve. The information herein is correct to the best of our knowledge and belief at press time. Specific advice should be sought from us, however, before investment or other decisions are made.

Copyright 2012 Rubin Meyer Doru & Trandafir, societate civila de avocati. All rights reserved. No part of The Romanian Digest™ may be reproduced, reused or redistributed in any form without prior written permission from the publisher.

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